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MARKETING THE STEPHENS BRAKE SHOE 1 



A. The Stephens Brake Shoe 

R. Stephens Company of Chicago, affiliated with R. Stephens & 
Sons of London and Paris, manufactures an adjustable brake shoe for 
Ford cars. This brake shoe is the invention of Mr. Richard Stephens 
of London, England, designer of the original Stephens motor car. It 
is made of tee section steel, fitted with heavy asbestos lining and 
equipped with a valuable patent adjustment. The manufacturers 
believe that such a brake is needed because of their conviction that 
the standard Ford emergency brake, which is made of light cast iron, 
breaks easily, cannot fit a worn drum, and if used regularly or on hills 
will require frequent replacement. 

Several lined brakes have been produced to take the place of the 
Ford brake; they have been made of cast iron, malleable iron, flat 
steel, channel steel, and even tee steel, and some have met with a 
measure of success. The chief differences between these brakes and 
the Stephens brake are quality, design, and price. The Ford brake 
sells for 70 cents a set and other brakes mentioned for from $1.25 to 
$3.50 per set. The Stephens brake is sold for $5.50 per set. This 
results in some sales resistance, for the Ford owner is in the habit of 
buying his accessories and parts at a low price. 

The intrinsic and practical qualities of the Stephens brake have 
made an appeal to many observers. In England, where the brake has 
been on the market for several years, the task of marketing has met 
with distinct success. This success in a country where there are only 
300,000 Ford cars led the Stephens Company to believe that it would 
be comparatively easy to market the brake with much greater profit 
in the United States where more than 5,000,000 Ford cars have been 
produced and where approximately 1,000,000 new Fords are manu- 
factured each year. The chief problem, and the one discussed herein, 
was the selection of the channel through which the marketing should 
be done. 

1 The publication of this case is possible because of the generous co-operation 
of Mr. Percy W. Stephens, president of R. Stephens Company. 

95 



96 THE UNIVERSITY JOURNAL OF BUSINESS 

B. Attempting to Sell the Ford Motor Company 

The first selling effort was an attempt to sell the Ford Motor 
Company direct. A representative of the R. Stephens Company 
called upon the manager of the Purchasing Department of the Ford 
Motor Company and proposed three plans: that the patent be sold 
outright, that the device be manufactured by the Ford Company and 
used under a royalty, or that the Stephens Company manufacture the 
device and sell it to the Ford Company at a small profit per set. 

The Purchasing Department expressed an interest in the brake and 
a set was left for trial. Two months later the Stephens representative 
called and the brakes were taken off the test car. He reported to 
his company that, although the operation of the brakes was declared 
perfect, no selling arrangements could be made because the adoption 
of the new brake would increase the cost of the Ford car without 
increasing sales, involve a change in tools which would slow up pro- 
duction, and necessitate the scrapping of the quantity of cast iron 
brake shoes then on hand. 

C. Attempting to Sell the Jobber 

The next effort was an attempt to sell the jobber of automotive 
products. The leading jobbers and manufacturers of automotive prod- 
ucts in the United States and Canada are organized as the Automotive 
Equipment Association with headquarters in Chicago. They pride 
themselves on being the "legitimate" channels for the marketing of 
automotive products. There are some 500 members in the Association, 
and about 450 additional recognized jobbers who are not members. 
Combined they have about 6,000 salesmen. It is evident that the 
jobbers constitute a powerful sales group. 

Representatives of the A.E.A. gave several reasons why the new 
brake shoe should be sold through this channel of distribution: (1) 
the size of the association, (2) the fact that fewer salesmen are neces- 
sary to sell jobbers than to sell dealers, (3) the possibilities of the 
Accessory Show held in Chicago each year under the auspices of the 
A.E.A. for jobbers only, and (4) the fact that most dealers are in the 
habit of buying from their own jobber. The Company had already 
been warned that eliminating the jobber would create opposition to 
their product, would result in its being boycotted, and would produce 
considerable sales resistance because of the reluctance of the dealer 
to purchase from a new house. It was further suggested to the 
R. Stephens Company that if the new product was not sold through 



MARKETING THE STEPHENS BRAKE SHOE 97 

EXHIBIT A 
Letter to Jobbers 




R. STEPHENS CO. 

AUTOMOTIVE SPECIALTIES 
SS TO ZO M. CLINTON STREET 

CHICAGO 

STEPHEN* AJUSTABUt MAKC SHOE STEPHENS AUTOMATIC OASIONAL 

"Til* Bm.» thai Orlpi Ibi E MV A Mht Wwntag W*m VM Hm4 Om 

Qhri. 100% Wok A 101% P*v» Mwqn rjnWr, fund • A u ttiwUH • latufMfn 




12-30-21. 



Brown Bros., London, England, E. J. Cook, Jaffa, Palestine and Hurray Bros., Johanesburg, 
South Africa, sayj "STEPHENS ADJUSTABLE STEEL BRAKE SHOE was" our bast seller in 1921 
as it was in 1920." Thousands of distributors the world over say the same. 

We hive just organized the above Company to market our Specialties in the States and 
shall sell thru approved trade channels. Attractive and convincing literature is now 
being printed and as soon as distribution is planned. National Advertising will start. 

To get the full benefit of this Advertising you should list STEPHENS ADJUSTABLE BRAKE 
SHOE and STEPHENS AUTOMATIC OASIGNAL in your 1922 Catalog. Re will furnish cuts free 
with an order for a sample set, if you will tell us the'siie cuts you need. 

STEPHENS ADJUSTABLE BRAKE SHOE is made of steel, fitted with extra heavy wire-woven 
asbestos lining made especially for us. The adjustment is fully covered by combination 
patents which wo control In addition to our own World Patents. The Shoe sells well in 
England for $11.00 but is listed here at $7.50. Quality, Durability and 100J Efficiency 
all the time mako it an easy seller. In one territory where there are 200,000 Fords, 
the sales to Dec. 1st this year were over 50,000 Shoes. It sells itself because it is 
perfect in theory and practice and Is well made. 

STEPHENS AUTOMATIC GASIONAL is another winner. It warns the driver his gas Is low by 
gradually cutting down the supply at the 10 mile limit. Open QASIONAL and Lizzie is 

good for another ten. No floats or delicate mechanism. Listed at $3.25. 

If you prefer, write us giving full information on your requirements. Otherwise 
mall at once the enclosed card and have «uts in time for your new Catalog. 

Tours with "The Line of Least Resistance" 
Discounts for Distributors and a Prosperous 19 2 2 

~ R. STEPHENS CO, 



Off single sets - 25* . &? »> j iX~€£L 1 /# 



dozen ■ -33-1/3* fV^fJU A*ft^_ 

hundred * - 50<£ 



^^t 




"Stephens Adjustable Brake Shoe is the 
outcome of extensive development. It Is veil 
constructed. It accomodates worn drams." 



the jobber, its success was doubtful and that the Company would 
eventually attempt to sell its product through jobbers. They could 
not, however, expect to find the jobbing trade as friendly as though 
the product were put out through it in the first instance. It was 
decided, therefore, to adopt the jobber as a marketing channel. 



98 THE UNIVERSITY JOURNAL OF BUSINESS 

The first effort to reach the jobber was through the mails. A 
filled-in form letter in two colors was addressed to every jobber in the 
United States and Canada (see Exhibit A, p. 97). In it the Company 
used the success of large European jobbers with its products as a selling 
argument and offered to send samples at the full jobbers' discount. Cuts 
for jobber catalogues were also offered. A stamped return card was in- 
closed, but only two were returned, one from the South saying "not inter- 
ested," another from the East saying " We do not need cut or samples." 

Personal solicitation was next tried but with equally poor results. 
The leading jobbers of the Middle West were visited, but only one 
was interested. This jobber asked to have a representative of the 
Stephens Company address his salesmen who were about to meet in 
Chicago for their annual convention. It was understood that if 
these men could be sufficiently interested in selling the product this 
jobber would take on the line. Following the talk the men not only 
expressed genuine interest, but one man bought a set of brakes for 
his own car. Notwithstanding their interest, they were unwilling to 
attempt to sell the brake shoe. 

The reasons why the jobber's salesmen did not wish to handle 
the brake shoe appeared to the Company to be the following: jobbers' 
salesmen are not specialty salesmen. They are order takers. They 
handle items which the dealer calls for, but they do not carry samples, 
nor will they do the pioneer work necessary to establish a new product. 
They, therefore, do their best work in disposing of a product which 
has already been established or in selling one which is being introduced 
with a national advertising campaign. 

D. Attempting to Sell the Dealer 

The dealer was next considered as the immediate market for the 
Stephens brake shoe. 

The authorized Ford dealer seemed a logical man to handle parts 
for Ford cars, but the Ford contract "suggests" that the Ford dealer 
shall not handle products which displace genuine Ford parts. Such 
products are called "spurious" and the penalty for handling them 
may be the loss of the agency. In addition, the Ford contract obli- 
gates the dealer to carry in stock a given number of Ford parts. This 
quota is big enough to require considerable attention from the dealer 
and adds to his reluctance to take on "spurious" parts even though they 
may show him greater profit. To be sure, a few Ford dealers will sell 
"spurious" parts which have special merit but it appeared difficult to 
get any satisfactory volume of sales through the authorized Ford dealer. 



MARKETING THE STEPHENS BRAKE SHOE 99 

To the Company independent dealers appeared to present other 
difficulties. Many of them are poor pay. All of them are in the 
habit of buying from their jobber. It, therefore, takes time to gain 
their confidence and get them to open a new account. Selling the 
dealer involves a large sales force, a big credit risk, and a mass of 
office work. For these reasons, it was decided it was not the method 
for the new organization. 

E. Attempting to Sell the Ford Owner Direct 

The next effort was to sell the Ford owner by mail, C.O.D. 

Instead of buying mailing lists from publishers at a price ranging 
from $2.50 to $6.00 per thousand names according to the state, a 
form letter was addressed to the secretary of state of each state in the 
Union, asking his price for a list of cars registered there. New Hamp- 
shire and Nevada furnished their lists free, other states made a charge 
ranging from $.50 to $25.00 for the complete list, and in some states 
where the law does not require the printing of such a list reference was 
given to a stenographer or clerk who would prepare a list for a nominal 
sum. These lists gave the name and address of the car owner, the 
make of car registered, its age and horse-power. 

A mailing folder was prepared (see Exhibit B) containing a 
guaranty that if the brake shoes were not entirely satisfactory the 
full purchase price would be refunded and a new set of standard type 
Ford car brake shoes furnished free. A test was made in eastern 
territory by sending out a few thousand of these folders with 
unstamped return cards (see Exhibit C). These cards announced 
special introductory prices. One set of brake shoes in combination 
with another of the Company's products, known as Gasignal, were 
offered in a single carton for $7.00 (regular price $10.50). The brake 
shoes alone were offered at $5.50 (regular price $7.50), and Gasignal 
alone at $1.95 (regular price $3.50). One card was returned, the only 
assurance that any folders had been delivered! This card brought 
an order — an order for one Gasignal at the reduced price of $1.95 
delivered. It was mailed, but a few days later the post-office gave 
information that the package had been refused by the consignee. 
The Stephens Company, knowing that follow-up has saved many a 
mail campaign, mailed a second folder. To this there was not a 
single response. The test was disappointing, but was considered a 
sufficient indication of the futility of trying to market the product 
through the mails under the conditions which existed in 1921. 



IOO 



THE UNIVERSITY JOURNAL OF BUSINESS 



EXHIBIT B 

Outside of Mailing Folder to Ford Owners 



"50% MORE LIFE TO TRANSMISSION— BACK AXLE — REAR TIRES" 



Is just one of the benefits Ford Owners say they get by using 

Stephens Adjustable Brake Shoes 

READ WHAT USERS SAY— THOUSANDS MORE LIKE THEM ALL OVER THE WORLD 



8COTLAKP 

-Ci»r«lr «-.•-•> 

nrki i*Ua4>d 
Dr. Ctrnnd 


JAMAICA 

Y.m W.k. ii 
•wtftit I ln» 

*■". W.".M1~ 


TEAN3VAAL 

D«>t*B" — 

M.rnj Bret. 


AUSTRALIA 

pan AdJuittU* 

Ink* She..".-. 

K. M. Subk. 

■Ms*r 


SPAIN. 

■ ■tt.txtln."— 

MIIU, 

Vl«». 


ENQLAMD 

U».t*d YdilC. 


NEW YOKE 

F. Fiiih. 
Srettklyn. 


AFRICA 
"A nal tni* f.t 

'Tilt It'.r." 


PALESTINE 

nt*dH b.air ■ - 
E. K Cc*k. 

J.JI4 


FRANCE 
JmI/ 7 - * |l * n '* 

* F.rt. utl 



SOLD IN ALMOST EVERY COUNTRY— WORLD PATENTS SECURED 

THE AUTOCAR says. "An extremely ingenious and interesting brake shoe When worn, the 
shoes can instantly be brought back to original adjustment. This results in longer life for lining 
and leaves the brake cam at angle of greatest power. Another advantage is a pair of new shoea 
can be fitted and adjusted perfectly in a worn drum." 



THREE of our GREAT CONTRIBUTIONS to the AUTOMOBILE INDUSTRY 



FIRST 

STEPHENS MOTOR CAR 

Built at our European Works— 1697 



STEPHENS 
ADJUSTABLE BRAKE SHOE 



"The Brake that Grips the Earth" 



STEPHENS 

AUTOMATIC GASIGNAL 

Sunple-^Easy to Fit — Inexpensive 




Twin cylinder*, tube ignition; belt 
drive; three point suspension. 
Now on exhibition in London. 





Universally usetfoit 
The Universal Car 



Warns when gas is low — Saves 

reserve supply of gas far 10 

miles after giving warning 



STEPHENS ADJUSTABLE BRAKE SHOE ia on permanent exhibition. Science Dept.. 
S. Kensington Museum, London — a striking proof of its originality and value. 




fc. Paid 

Chicago, III. 
it No. 2234 



FORD OiryER .< \D DE.iLER tar lMireare, I«5J. ta;« .-.■'Stephen* Adjustable 
Brake Shoe* compensate for wear of either the brake lining or the brake drums." 



F. Selling the Distributor 

The foregoing experiences indicated to the Company that specialty 
selling would be necessary with such a new automotive device. It was, 
therefore, decided to appoint distributors in various parts of the 



MARKETING THE STEPHENS BRAKE SHOE 



101 



EXHIBIT B 
Inside or Mailing Folder to Ford Owners 



AT OUR EXPENSE PUT STEPHENS ADJUSTABLE BRAKE SHOES ON YOUR FORD 




*• BRAKES ARE ADJUSTED MERE'' 
WITHOUT REMOVING WHEELS OR SHORTENING BRAKE RODS 
"ADJUSTMENT PERFECTLY SIMPLE AND SIMPLY PERFECT" 




You Gain These 
ADVANTAGES 

1— Stops- Car Quickly sad 
Smoothly — eliminate* that 



2— "Cuts Your Repair MI in 
Half by saving transmission, 
differential and tires" say the 
users, 

3— Extra-heavy Lining made of 
asbestos, double wire-woven 
— the best money can buy. 

♦—Patent Adjustment wear* lin- 
ing to shaving thickness all 
around — keeps operating cam 
at point of greatest leverage — - 
gives 100% power and 100^ 
wear always. 

S — Easy Adjustment — no more 
dirty hands or soiled clothes 
crawling under ear "to shorten 
brake rods." 

6 — Fits Worn Drums like new— 
the only brake that will. 

7 — A Permanent Brake — bring 
made of rolled steel it lasts 
as long aa your car. 

8— Safety First, Last, Always. 
Expensive cars have two good 
brakes—don't risk your life 
on one — it may fail in an 



GOOD BRAKES ARE YOUR CHEAPEST INSURANCE 

One accident may cost you ten times as much 



ORDER YOUR SET TODAY 

Easy to Fit — No Changes Necessary 
If Not Satisfied It Costs You Nothing 



1 



50 



l.ndcn ind W< 



REFERENCES 

Tmini'tt BinV NorwUi Lsndift 



R. STEPHENS CO. 

Department r 

28 N. Clinton St., Chicago 



POST PAID In US. A. 

If Your Dealer Cannot Supply You We Will. 
SEND NO MONEY 

Simply send us a postal card or letter giving us the name of yom dealer and 
the license number of your car, and ask us to send you a set of Stephen* 
Adjustable Brake Shoes, C O. D. We will mail you a set, on the special 
terms of our guarantee, postage prepaid. When your mailman delivers 
package you pay him $7 SO. The price of CASIGNAL is $3.50. We will 
send either separately at these prices or the two in one package for $10.50. 



YOUR CAR DESERVES THE BEST BRAKES — ORDER A SET TODAY 



country. With this method of distribution it was planned to deal with 
only about 150 distributors for the entire United States and Canada. 
The amount of territory to be worked by each distributor was 
determined by his financial capacity, his sales ability, and the number 
of Ford cars in his territory. There were big differences in the size 



102 THE UNIVERSITY JOURNAL OF BUSINESS 

EXHIBIT C 

Return Card Used with Mailing Folder to Ford Owners 
(See Exhibit B) 





Stephens Brakes and Gasignal. 

MUST MAKE GOOD, 

OR WE WILL 

R. STEPHENS CO., DepL F 

26 to 28 N. Clinton Street 

Chicago, 111. 



PLACE 

ONE CENT 

STAMP 

HERE 



R. STEPHENS CO. 

26 to 28 North Clinton St, 

CHICAGO, ILL. 



of the territories agreed upon. In some states relations were made 
with two or three distributors; in other states with only one. The 
three Pacific Coast states are being worked by one distributor who 
travels about sixty men out of his eight distributing centers in the 
territory. The Dominion of Canada is being worked out of Toronto 
by one distributor. 

A distributor may or may not have had previous experience in 
the automotive business. Some men were picked who knew nothing 



MARKETING THE STEPHENS BRAKE SHOE 



103 



EXHIBIT C 

Reverse of Return Card with Mailing Folder to Ford Owners 

(See Exhibit B) 



Ford Gas Tank with Gasignal in Position 




Put Gasignal on your Ford 
Never Get Stalled 

GASIGNAL is the only satisfactory reserve valve for 
Fords' — gives a positive warning when gas is low by cut- 
ing down the supply. Alter warning, open GASIGNAL 
and you can drive about 10 miles more. You. don't have 
to remember to close GASIGNAL after use. it closes itself 
when you fill with gas — positive and automatic. No floats 
or delicate parts —-nothing to get out of order. 

EASY TO FIT— simply unscrew Sediment Bulb and screw 
GASIGNAL in ; then screw Sediment Bulb into bottom of 
GASIGNAL as illustrated. 



Fits all FORD Cars and Trucks 



Only $1.95 



To ran out of gat may cost you four time, 
a* much and considerable inconvenience* 

PLAY SAFE— ORDER YOUR GASIGNAL TODAY I 



Tear off this coupon 
and mail at once. 



Special Introductory Offer 



One act Stephen* Adjustable Brake Shoe* and Gasignal in one package. $7,00. 
If ordered separately. Adjustable Brakes are $5.30 and the Gasignal $1.95. 



TO R. STEPHENS CO.. Chicago. Date 

GENTLEMEN: i accept your special offer. You may mail me, 

SlJ.mlwii.D One Set Stephens Adjustable Brake Shoes. 

*«£. Q One Stephens Automatic GASIGNAL (or Fords. 

On delivery 1 will pay my mailman $_ 



If not entirely satisfied after trial, 1 reserve the right to return the package within fourteen 
days after arrival, on receipt of which you are to immediately refund me the full purchase 
price on the terms of your guarantee. 



NAME 

ADDRESS- 



My Dealer is . 



MAIL THIS CARD TODAY 



ONE CENT WELL SPENT 



about the business but who had the other necessary qualifications, and 
in some cases they have proved to be excellent distributors. For 
example, a firm of grain and feed brokers are handling the state of 
Pennsylvania satisfactorily. 

The usual method of securing a distributor is by visiting the 
territory and picking out the best man available. When the Company 
knows that a certain man in open territory is well qualified, negotia- 



104 



THE UNIVERSITY JOURNAL OF BUSINESS 



tions are opened by mail. If this man is interested, a representative 
of the Company visits him to close the deal. Sometimes a man is 
picked who is already handling an automotive product but who wants 
to handle another line. Unsolicited applications reach the Company 
for local agencies in open territories. If upon appointment, such local 
agents make a promising record, they are made territory distributors. 
The requirements imposed on distributors are not burdensome 
(see Exhibit D, p. 105). Distributors are required to carry a stock 




MERCHANDISING 

C W I C A O O 



FLAN 



sufficiently large to meet the needs of their territories and in addition 
there is fixed by mutual consent a small quota based on the number 
of Ford cars in the territory. This quota must be met if they are to 
retain the exclusive selling rights. 

The way in which these distributors function is shown in the 
accompanying diagram of merchandising policy. 1 The distributor is 
the only man in his territory with whom the Company deals. All 
orders, inquiries, etc., received from his territory are immediately 

1 Although there are probably not more than 5,000,000 Ford cars in use in 
the United States and Canada, 10,000,000 cars are mentioned in the diagram 
because of the Company's plans for adding other products which apply to all 
makes of car. 



MARKETING THE STEPHENS BRAKE SHOE 105 

EXHIBIT D 
Confirmation of Contract with Distributors 



CABLE ADDRESS AJBRAKSHU 




R„ STEPHENS CQ, 




1102 WEST LAKE STRI 

CHICAGO 



DISTRIBUTOR'S AGREEMENT FOR SALE OP 
SH'.RiiUS ADJUSTABLE BRAKE SIDE 

Chandler & Lynn 

1212 South Michigan Avenue 

Cleveland, Ohio 

Gentlemen: 

It gives us pleasure to confirm your appointment as the Distributor of 
STEPHENS ADJUSTABLE BRAKE SHOES. Your Exclusive Territory, Monthly Quota, 
and Net Discounts are indicated at the bottom of this letter. 

So long as you take from us each month the number of Brakes indicated as your 
Monthly Quota, we agree to sell no one else in your territory. The Quota 
becomes effective thirty days after the a rrival of the first shipment, thus 
giving you considerable time for introductory work. 

Your Discount is baaed on our published list price, f.o.b. Chicago, and all 
shipments are made either C.O.D., or Draft Attached to Blll-of-Lading. 

You are not to sell, or offer for sale, our Brake in any other Territory than 
that named below without our written permission. Should you at any time find 
another Distributor selling our Brake in your Territory, you are to notify ub 
and we will instruct him to discontinue this practice. Should he refuse to do 
so, so that his continued sales become obnoxious to your interests, we will 
cancel his contract and refuse to supply him with more Brakes. 

We will turn over to you all orders or inquiries received from your Territory, 
will supply you with Advertising Material at half its actual cost, and will 
furnish you free such electros as are considered necessary for your local use>V 

1,. Your Territory Is 

2.. Your Monthly Quota i s ' 



3. Your Net Discount is 



We wish you success, and assure you of every reasonable cooperation. 

Yours for Record Breaking Sales 
with the Record Breaking Brakes, 
PWS:SEA R.. STEPHENS CO. 





■N.B. Mo Distributor's Agreement is valid unless" *^5^i?3 
signed by the President of the Company. 



referred to him and the Company so notifies the sender of the com- 
munication. 

The jobber to whom the distributor sells is referred to in the dia- 
gram as a sub-jobber. This is to imply that the distributor may be a 
jobber. Many small jobbers buy from the larger ones and the use 



106 THE UNIVERSITY JOURNAL OF BUSINESS 

of the term sub-jobber helps to break down resistance when trying to 
get a jobber to act as distributor. The chart connects the sub- jobber 
with the car owner direct because, though jobbers essentially sell at 
wholesale only, many have a retail department, and some have retail 
stores which they operate under a different trade name. 

There is no ironclad policy under which a distributor must sell 
Stephens' products for the reason that no two distributors work under 
the same conditions nor have the same facilities. Distributors' views 
are considered in determining the policy best suited to their facilities. 
A distributor may sell the jobber, the dealer, or the car owner, or 
he may use two or more of these methods, providing it can be done 
without conflict. The distributor naturally adopts the method of 
distribution which will yield him the most profit. 

In determining its scale of discounts the Stephens Company fell 
in with the following schedule which, with slight variations, is com- 
monly used in merchandising automotive products: 

Per Cent 

Distributor's discount .... 50 and 10 
Jobber's discount 50 

Dealer's discount: 
On small shipments .... 25 
On large shipments .... 33% 

These discounts are based on the published retail price. Jobbers 
and dealers are usually allowed an additional 2 per cent for cash 
within ten days from date of invoice. All shipments which are 
made to the distributor are either draft attached to bill-of-lading or 
C.O.D. 

Because of the big discount required by the jobber it is usually 
not possible for the distributor to make much profit by selling to him. 
This, together with the difficulties which are met in securing the job- 
ber's interest, leads the distributor to the dealer and car owner. 
Because he is located in the territory where his sales are made, he is 
able to take care of the dealers without heavy traveling expense and 
is in a good position to handle their credit situation. 

The distributor method of selling has been found fairly satisfactory. 
Many distributors make a good return upon the business transacted 
for the R. Stephens Company. Even those who fail to market the 
product successfully give the Company desirable publicity. One 
weakness in the plan is the fact that discounts must be large in selling 
to a representative who may wish to interest the jobbing trade. 



MARKETING THE STEPHENS BRAKE SHOE 107 

G. Helping the Distributors 

Selling the distributor by no means ends the problem, whether 
the distributor be an individual, a dealer, or a jobber. The regular 
dealer and the car owner must be reached, and the dealer is the point 
of chief interest. Unless he is sold on the product, puts it in stock, 
displays it in his store, and sells it to his customers, there is no chance 
to get repeat business. It is, therefore, necessary to help the distrib- 
utors as much as possible. In the case of the jobber the problem is 
largely solved by giving his salesmen the necessary selling points, as 
they are already in touch with the dealers. If the distributor has no 
sales organization, the Company advises him concerning the plan 
best suited to his situation. On the basis of this advice he either 
employs salesmen, secures agents, does direct-by-mail and local adver- 
tising, or appoints sub-distributors. In the latter case an active dealer 
is often appointed and placed on a quota basis somewhat similar to 
that described above for the distributor. This usually works more 
satisfactorily than do agents because the dealer is already in touch 
with car owners who have confidence in him. Moreover, many motor- 
ists prefer to buy their products from a reputable dealer rather than 
from an unknown agent. 

Both distributors and those to whom they sell are supported by 
the Company's advertising. On the request of any distributor the 
Company sends letters to Ford fleet owners or dealers. Advertise- 
ments are run in the leading motor publications used by Ford dealers 
and owners (see Exhibit E). The chief media are the Ford Owner and 
Dealer, the American Automobile Digest, and Farm Mechanics. No 
effort is made to carry on an elaborate advertising campaign. 

In addition to the above, cuts are furnished free to distributors 
and dealers for local advertising and literature is supplied at 50 per 
cent below its actual cost. The Company's guaranty of satisfaction 
or money back with a set of standard Ford brake shoes free is printed 
on every carton. Colors and a good-sized picture of the product 
give this carton considerable display value (see Exhibit F, p. 109). 
Window cards are distributed in every box containing twenty-five 
sets of the brake shoes. 

H. Results Attained 

The chart of the sales of the Stephens brake shoe shows a steady 
upward curve, although the product was launched in this country 
during a period of serious business depression. The Company attrib- 



io8 



THE UNIVERSITY JOURNAL OF BUSINESS 



EXHIBIT E 
Typical Advertisements in Automobile Publications 



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MARKETING THE STEPHENS BRAKE SHOE 



109 



EXHIBIT F 

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End op Carton 



I I I I I I I I 1 1 I I I I I I I I I I I I I I I I I I 



FITTING INSTRUCTIONS 
To fit Siephsm Adjuslahle Brake Shoes remove rear wheels, take out old shoes and 
support bolt. Put STEPHENS ADJUSTABLE SHOES in position, -with adjusting 
block flush with face of shoes as illustrated. Set hand lever w Clutch-Out position 
and by adjusting rods set, the cam between operating end of brake shoe on the point 
of expanding shoes ( HOT H0R£ ), then replace wheels. The brake can then be adjusted 
by turning adjusting bolt anti-clockwise for tightening. Wc supply a special bolt, but 
no lock-nut. Use tie nut off the old bolt. 

R.STEPHENS CO. 



iiiiimiminiimnnm 



no THE UNIVERSITY JOURNAL OF BUSINESS 

utes its success to two things. First, the quality of the product. 
Every set of shoes sent out has been individually tested, and the dealers 
know when they sell a Stephens brakeshoe it stays sold. The second 
factor which the Company believes has contributed to its success is its 
merchandising policy. 

I. Developing a New Channel — the Jobber-Distributor 

Gratifying as results have been, the Company is now modifying its 
selling policy. This change is being made because, of the difficulties 
experienced with distributors who are either too small to handle their 
territory or who have had inadequate experience in the automotive 
industry; also because the jobber is the logical channel through which 
to market such products as a brake shoe. The new policy makes it 
possible for the jobber to become the distributor, notwithstanding his 
aversion to specialty selling. 

In approaching the jobbing trade with this new policy the Com- 
pany first points out to the jobber the fact that his indifference to a 
new product which requires specialty selling has resulted in a new 
channel having been opened for the marketing of automotive products. 
This channel is the distributor. Distributors frequently become real 
competitors of the jobber. After the distributor has developed the 
product so that dealers are calling for it, the jobber either cannot 
secure it at all or must divide the manufacturer's discount with the 
distributor. When the jobber gets this point the Company expresses 
its desire to aid in eliminating the distributor and its willingness to 
replace its distributors with one exclusive jobber in a given territory. 
Such a jobber is offered distributors' discounts which are larger than 
those ordinarily given the jobber. 

The jobber is usually interested up to this point, but when he 
thinks of his salesmen, the necessity of specialty selling, and the carry- 
ing of samples, his courage fails. Then comes the important feature 
of the new policy. The Company points out that although it would 
be impracticable to load a jobber's salesman with samples, this does 
not eliminate the possibility of his carrying one sample at a time. 
Say it takes thirty days for a salesman to make his round, the Company 
advises that he carry one sample of a new product on which the jobber 
has exclusive selling rights, each time he starts out. This will elimi- 
nate the distributor, will give the jobber the bigger discounts, will give 
his men an opportunity to build up a good demand for products they 
control exclusively and will also give the salesman something new to 



MARKETING THE STEPHENS BRAKE SHOE in 

show his trade. An additional advantage lies in the fact that a dealer 
who is not now purchasing from the jobber in question can be inter- 
ested in a new product and thus become an easier prospect for the 
jobber's entire line. All this can be accomplished without burdening 
the salesman with many samples. This jobber-distributor policy 
promises to bring increasingly good results. It produces a favorable 
reaction among the trade, keeps the Company within approved 
channels of distribution and makes available good sales organizations. 
Several jobbers, including some of the largest and most reputable 
in the automotive industry, have already agreed to work with the 
Company under this new policy. 

QUESTIONS AND PROBLEMS 

i. Do you consider the procedure followed by R. Stephens Company in 
determining the best channel of distribution wasteful? Can you 
suggest any way in which the ultimate conclusion might have been 
reached sooner ? 

2. Can you suggest methods other than the one used by this Company 
for approaching the Ford Motor Company ? 

3. Do you see any reason to question the wisdom of the conclusion reached 
by R. Stephens Company that jobbers were not an available channel of 
distribution ? If possible, put this question to an automobile accessory 
jobber. 

4. Was R. Stephens Company justified in launching a mail campaign to 
jobbers on the basis of the representations of the A.E.A ? 

5. Can you suggest any change in the letter to jobbers (Exhibit A) which 
might have increased its productiveness ? 

6. Do you agree that selling to authorized Ford dealers or independent 
dealers is not a satisfactory method of distribution for R. Stephens 
Company ? 

7. R. Stephens Company passed by the independent dealer without trying 
to sell him. Can you furnish any evidence to support this action ? 

8. Do you believe R. Stephens Company was right in abandoning its 
efforts to sell Ford owners direct ? Do you see any reason to believe that 
the mail order method could be used profitably with Ford owners today ? 

9. Can you suggest any change in the mailing folder or return card used 
in the Ford owner campaign (Exhibits B and C) which might have 
increased their productiveness ? 

10. Re-work the mailing folder used in the Ford owner campaign (Exhibit 
B) to make it suitable for use by R. Stephens Company distributors. 

n. What seem to you the chief merits and limitations of the exclusive 
territory distributor plan finally adopted by R. Stephens Company ? 



112 TEE UNIVERSITY JOURNAL OF BUSINESS 

12. What seem to you the most significant points in the letter used by R. 
Stephens Company in making their contract with distributors? (See 
Exhibit D.) Would you make any changes in it ? Would you favor 
using a formal contract in place of such a letter ? Why ? 

13. Does the Company's present method of selling through distributors fail 
to give sufficient protection to any single type of accessory merchant ? 

14. In view of all the information given in this case, do you agree that R. 
Stephens Company is wise in attempting the jobber-distributor method 
of marketing ? 

15. What, in your judgment, should R. Stephens Company attempt to do 
at present through its advertising ? 

16. What is your judgment of the advertisements which R. Stephens Com- 
pany has run in automobile publications ? (See Exhibit E.) 

17. Work up an original advertisement on the Stephens' brake shoe for 
use in Ford Owner and Dealer or American Automobile Digest. 

18. In an attempt to develop distributors out of local agents in open terri- 
tory R. Stephens Company proposes to send out the following letter to 
Ford owners. Would you O.K. it ? If not, what changes would you 
make in it ? 



R. STEPHENS CO. 
1152 West Lake St., Chicago 

Mr. Ford Owner: — 

By selling only five sets of our products a day an agent makes about 
$00.00 per week. Some agents sell as many as ten Ford Owners a day. 

We are now looking for Agents and Distributors for your State. You 
are one of a selected group of Ford Owners to whom this letter is going. 
From the first replies we shall pick our Agents. 

Any applicant for the Agency can buy for trial one set of Brake Shoes 
and one gasignal at agents' prices which are $3.30 per set for Brake Shoes 
and $1.00 each for Gasignal f.o.b. Chicago. After the trial shipment 
Agents take six at a time in one package. All shipments are C.O.D. The 
Brake Shoes sell for $5.50 and Gasignal for $3.50 so that Agents make a 
liberal profit. 

What the Agent earns depends entirely upon his industry. 

If you want to make some real money here is your chance. 

Others are doing it — doctors, business men, salesmen, clerks, etc. — 
men and women — all making extra money during their spare time. You 
can do it too. 

Simply fill out the form below and mail it today. Our guarantee 

protects you. 

R. Stephens Co. 



MARKETING THE STEPHENS BRAKE SHOE 113 

Order Form and Application for Agency 

This form entitles you to from 1 to 6 sets of our products on Agents' 

terms. 

R. Stephens Co. 
1152 Wes!^ Lake St. 
Chicago, Illinois 

Date 

Gentlemen: 

Please send me the following C.O.D. 

sets Stephens Adjustable Brake Shoes at $3.30 per set. 

Stephens Automatic Gasignal at $1.00 each. 

It is understood in placing this order that I am to receive the exclusive 

representation for these products in my territory which is 

provided I am the first to send from this district an order for six sets of your 
products and provided my references given below are satisfactory. 

It is a further condition that if the exclusive representation is given to 
me, it is to be mine as long as I send orders to you regularly and continue 
to sell your products in my territory. 

Signed 



References: — 

(1) 

(2) 



Address- 



(Tear off this form and mail today) 



19. In addition to the brake shoe R. Stephens Company sells a simple, 
inconspicuous and readily attached device for Ford cars, known as 
gasignal. This device protects the driver against his own forgetful- 
ness by assuring him a reserve supply of gasoline. At present gasignal 
is being marketed through the same channels as the brake shoe, but 
the sales volume is not satisfactory. The Company is sure the diffi- 
culty is not with the product. Do you recommend a change in the 
method of distribution ? Justify your position. 

20. What lines of expansion would you suggest for R. Stephens Company ? 
What effect would these additional products or activities have on its 
system of distribution ?